Explorers 2012: NordAq tackles 2nd inlet prospect

Tiger Eye unit approved, drilling begins on first well; company working EIS for Shadura discovery in refuge

Kristen Nelson

Petroleum News

NordAq Energy Inc., with four Cook Inlet basin prospects and a block of tracts in Smith Bay off the North Slope of Alaska, is currently drilling its second Cook Inlet prospect, Tiger Eye onshore the west side, while an environmental impact statement is under way for Shadura, the company’s natural gas discovery on Cook Inlet Region Inc. subsurface in the Kenai National Wildlife Refuge on the Kenai Peninsula.

A Cook Inlet map on the company’s website shows two additional prospects, Akula southeast of Shadura on the Kenai Peninsula and Anakema, a mostly offshore prospect adjacent to Kenai.

NordAq is an independent oil and gas company based in Anchorage.

The company’s website, www.nordaqenergy.com, says the company was established by the present board and management team in 2008 to explore hydrocarbon reserves in Alaska.

“NordAq was established to take advantage of the attractive geological, regulatory and service environment for energy exploration in Alaska,” the website says, adding that as an independent exploration and production company, “NordAq aims to bring energy and entrepreneurialism to the Alaskan energy industry as well as to provide a vital function in opening and carefully developing frontier areas and sustaining E&P activity in mature basins.”

The company said while its focus is on oil exploration and production, it “remains committed to bringing new natural gas reserves into production to continue to meet the energy needs of the Cook Inlet region.”

Gas discovery at Shadura

NordAq drilled at Shadura in early 2011, a prospect on Cook Inlet Region Inc. subsurface in the Kenai National Wildlife Refuge northeast of Nikiski, saying the target was historic Cook Inlet gas producing zones in the upper and middle Tyonek formation with the Beluga formation a secondary objective. CIRI is the Alaska Native regional corporation for Southcentral.

A 2010 environmental assessment for the project said Shadura exploration activities were pursuant to an agreement with CIRI on 10,800 acres of CIRI subsurface estate holdings. The Alaska National Interest Lands Conservation Act allows for access to CIRI subsurface inholdings within the Kenai National Wildlife Refuge for exploration, testing and development of hydrocarbons.

The environmental assessment said CIRI has received entitlements to some 200,000 acres of subsurface estate adjacent to the leases being explored by NordAq under provisions of the Alaska Native Claims Settlement Act, and has development rights to oil, gas and coal resources on those lands.

NordAq indicated a natural gas discovery, but only reported late last year that it expected to produce “up to 50 million cubic feet” of natural gas per day over 30 years from Shadura, starting in February 2013.

NordAq has applied to the U.S. Fish and Wildlife Service, which manages the refuge, for a right-of-way permit to Shadura.

The Fish and Wildlife Service is preparing an environmental impact statement looking at different access alternatives for Shadura.

While NordAq cannot be denied access through the EIS process, certain conditions may be set, such as the route for the proposed gravel access road.

The schedule at a March scoping meeting projected release of draft and final EIS documents, with a record of decision in December.

NordAq has described Shadura as a six-well development.

Smith Bay acreage

In last December’s state oil and gas lease sale NordAq took a block of leases in the shallow waters of Smith Bay, an area that, like Harrison Bay, sits on the Barrow Arch, making it highly prospective for oil.

On its website NordAq says it leased 11 tracts at Smith Bay, some 60,000 acres, at the sale, describing the region as at the western end of the North Slope within Alaska’s Beaufort Sea.

The leases increased the company’s acreage position in Alaska to more than 103,000 acres.

“NordAq is currently analyzing the lease prospects to determine how best to capitalize on the acreage’s significant potential,” the company says on its website.

Tiger Eye drilling

This year NordAq was scheduled to start drilling Oct. 9 at its Tiger Eye unit on the west side of Cook Inlet. The Alaska Department of Natural Resources, Division of Oil and Gas approved NordAq’s application for the unit Oct. 4 at 7,680 acres, a reduction from the proposed 8,480 acres, and required drilling of the first well this year. Both leases in the unit, ADL 391103 and ADL 391104, would have expired Sept. 30 without unit formation. NordAq holds 100 percent working interest ownership in the leases.

Tiger Eye is at the mouth of the Kustatan River within the Redoubt Bay Critical Habitat Area, and NordAq located its pad and access on adjacent private Native surface land and will drill directionally to bottomhole locations under the critical habitat area.

In the Oct. 4 unit approval division Director Bill Barron said NordAq submitted a revised plan of exploration on Aug. 20, proposing to drill two exploration wells in 2012 and 2013, and to acquire 3-D seismic in 2013. In the company’s May plan of exploration drilling was slated for 2013 and 2014, with road and pad construction in the summer of 2012 and 3-D acquisition in the winter of 2012-13.

Under the revised plan of exploration the division said NordAq planned to spud the first well, Tiger Eye Central No. 1, before the end of September, “but had delays due to severe weather in the Cook Inlet area,” and now expects to spud Oct. 9.

Under the approved plan, NordAq is required to drill, evaluate and test the Tiger Eye Central No. 1 and complete, suspend or abandon the well Dec. 31.

Apache interest

The division said that when it asked for comments on the application, Apache Alaska Corp. objected to the proposed unit, telling the division that three adjacent Apache oil and gas leases should be included in the unit. “Apache believes its leases share common reservoirs with the leases proposed” for the Tiger Eye unit, the division said.

Apache told the division it believes “common reservoirs” cross the boundaries of Apache leases and the proposed unit.

In response, NordAq told the division its proposed unit “encompasses the entire area that overlies a potential hydrocarbon accumulation.”

The division said “information provided by Apache does not conclusively prove that the potential hydrocarbon accumulation” identified by NordAq extends onto Apache leases, so “there is no evidence that Apache has an interest in the potential hydrocarbon accumulation to be included in the unit.”

The division said what while evidence provided did not demonstrate a potential accumulation that crossed lease boundaries, if a common reservoir was discovered by drilling and put on production, expansion provisions of the Tiger Eye unit agreement “will protect all parties of interest by allowing production from a producing reservoir to be allocated back to each tract contributing to production in paying quantities.”

Prior exploration

The division said three exploration wells were drilled in the vicinity of the Tiger Eye unit: Pan Am Bachatna Creek State No. 1, completed in 1969; Hartog North Kustatan State Unit No. 1, completed in 1970; and Cities Service West Foreland State A-1, completed in 1973.

The Bachatna Creek and West Foreland wells, “updip of an interpreted northeast-southwest trending sealing fault that forms the potential hydrocarbon accumulation’s northwest boundary,” were plugged and abandoned. There were no oil shows in either well.

The North Kustatan well is “downdip of the mapped closure and had oil shows on the mudlog in the Tyonek formation.” That well was also plugged and abandoned.

The division said the trapping mechanism within the Tiger Eye unit is both structural and stratigraphic.

“The structure is seismically defined as a northeast-southwest trending fault with three-way closure. Interpreted crossfaults subdivide the prospect. The stratigraphic component of the trap is the thinning or pinching out of the Tyonek sands up toward the sealing fault.”

The division said principal objectives at Tiger Eye are sands within the middle and lower Tyonek formation; secondary objectives are in the deeper Hemlock and West Foreland formations.

“NordAq submitted sufficient technical data to support the approved unit area,” the division said. “Because there is a seismically identified entrapping mechanism, there is a potential hydrocarbon accumulation.”

Access issues

The division decision noted that access to the Redoubt Bay Critical Habitat Area “is restricted to ice roads and existing infrastructure for oil and gas exploration activities,” and that no exploration drilling has occurred in the area since the critical habitat area was created in 1989.

“NordAq has successfully negotiated access across adjacent private and Native lands to allow for year-round access and has installed a gravel access road and pad to explore the state leases. NordAq intended to commence drilling operations before its leases expire and has plans to continue operations based on the results of its initial well,” the division said.

In its application NordAq said the Tiger Eye Central pad is some 2.5 miles inland from Cook Inlet and 2.5 miles east of the Kustatan River, and said it would build a 2.27-mile single lane gravel access road from an existing lease road near the Cook Inlet shoreline.

NordAq said the road and Tiger Eye Central drill pad would be constructed on Salamatof Native Corp. lands.

First well on ADL 391104

Tiger Eye Central will be drilled into state lease ADL 391104 from a pad to the east.

“The entire project is located on private land until the well bore reaches a depth of 1,920 feet. From this depth to total depth of 11,500 feet TD, the well will be located on State land in ADL 391104,” NordAq said in its Aug. 20, revised, plan of exploration.

NordAq said it will be using Nabors Alaska Drilling Rig 106AC, an Arctic class mobile rotary drill rig, which will be mobilized to the site in truckable modules and assembled.

The company said it would use “existing infrastructure and resources found on the west side of Cook Inlet whenever possible during the project,” including barge landings, staging areas, gravel lease roads, gravel pads, airstrips, regulated landfills and water supplies.

NordAq said the majority of the well support services contractors have offices, shops and additional equipment in Kenai and Nikiski that will support their remote field operations for the Tiger Eye project.

For the second pad, to be constructed next year, Tiger Eye North, NordAq said it would build a 2.5-mile single land gravel access road from the existing lease road to the Tiger Eye North well location, where it would construct a gravel exploration pad. “A portion of the road near the proposed well pad will be constructed on state land to access the drill pad,” with the section on state land some 0.75 miles long and the remainder of the road on Salamatof Native Corp. lands.